Airbnb: A True Rags to Riches Story

The Origin Story of Industry-Changing Startup Airbnb

Person holding phone with Airbnb app.

If you’ve traveled in the past ten or so years, you’ve most likely perused the lodging options on Airbnb. From treehouses to couch-surfing options, Airbnb has it all, and the wildly popular website has become commonplace across the globe. But, Airbnb’s founders, Brian Chesky, Nathan Blecharczyk, and Joe Gebbia, didn’t begin shaking up the hotel and hospitality industry right away — the origin story of Airbnb started with an air mattress on the floor and two broke San Francisco transplants trying to make ends meet.


From Broke to Billions

Most of us have crafted creative ways to make ends meet —few have managed to turn their ideas into a billion-dollar company. But, that is exactly what the founders of Airbnb did. When then-designers Brian Chesky and Joe Gebbia moved from New York to San Francisco, it was 2007. The alternatives to hotels at the time were few and far between. However, the inspiration for what would become Airbnb wasn’t a carefully crafted startup idea — it was a last-ditch effort to make up the rent money they were lacking. 

One weekend, due to a conference in the city, every hotel room was booked. Visitors simply didn’t have the options they needed to stay in the city at the time. That is what prompted Gebbia to send the following email to his co-founder, Chesky: 

“brian 
I thought of a way to make a few bucks - turning our place into “designers bed and breakfast” - offering young designers who come into town a place to crash during the 4 day event, complete with wireless internet, a small desk space, sleeping mat, and breakfast each morning. Ha! 

joe” 

A simple website was created to advertise the “designers bed and breakfast,” resulting in Airbnb’s (called Air Bed & Breakfast at the time) first three guests. One, named Amol, was a fellow designer and helped the pair with their presentation of the Airbnb concept. Unfortunately for the pair, the idea wasn’t enough to propel them into success right away. The journey of Airbnb would be a rocky one, and the pair brought in Nathan Blecharczyk to help build their idea into a business.

Trials and Rejection

The company launched two more times in 2008, once with no luck and the second time with only two customers — one of which was founder Brian Chesky. By the summer of that year, a final version of the Air Bed & Breakfast website was complete and more narrowly targeted to a three-clicks-and-your-booked bend. Unfortunately, of the 15 angel investors the founders pitched to, none were interested. 

Despite several rejections, mounting debt, and financial turmoil — the trio persisted. They launched again at the 2008 Democratic Convention in Denver in hopes that overbooked hotels would result in an influx of bookings. However, this was not the case. Instead, they sold redesigned cereal boxes called “Obama O’s” and “Cap’n McCains” priced at $40 a box. This resulted in $30,000 to put toward their company. 

A wave of good fortune brought the Airbnb founders Y Combinator founder, Paul Graham. Y Combinator, a prestigious startup accelerator, would be the home base for the company for three months of product development. Pivoting their approach to harness their design background, the founders began actively staying in their host’s rentals to write reviews and professionally photograph each one. By March of 2009, Air Bed & Breakfast was officially changed to Airbnb, and, a month later, the company gained a seed investment of $600,000 from Sequoia Capital.

Navigating Success

Once substantial seed capital was secured, the company put its energy into understanding and growing their company. Founder Brian Chesky famously lived in Airbnbs for several months throughout 2010. Not long after, in 2011, Airbnb was established in 89 countries worldwide and hit a whopping 1 million nights booked, launching the company into a valuation over $1 billion as well as $112 million in VC investments, making Airbnb a Silicon Valley unicorn startup. 

In 2020, the company announced its plan to go public with Airbnb. However, the years between their $1 billion valuation and this were tumultuous. Hosts reported trashed homes, and the company ran into problems with evictions, fines, and more. Eventually, cities began campaigns against the company, testing not only the sustainability of the business’s success but also the ability of the founders to navigate the challenges they faced. Fortunately, not only are the minds behind this rags to riches story skilled at establishing a winning startup idea — they were able to navigate the rough waters of startup ownership to boast one of the most motivating startup origin stories to date.